The auction market has recorded its second-lowest preliminary clearance rate of the year, amid a drop in demand following the third consecutive rate rise and speculation about tax changes.
New data showed that the nationwide auction market recorded the second-lowest preliminary clearance rate so far this year, following the Reserve Bank of Australia’s (RBA) third consecutive interest rate rise last week.
Cotality’s latest Property Market Indicator Summary showed the early clearance rate dropped to 56.5 per cent last week, the second-lowest this year, after the Easter long weekend recorded just 55.5 per cent.
The data came as the nationwide market could be on the verge of a downturn, with rising interest rates and geopolitical issues impacting home owners’ borrowing capacity, squashing demand.
For its May interest rate decision, the RBA lifted the cash rate by 25 basis points to 4.35 per cent, putting further pressure on mortgage holders.
Meanwhile, this week’s federal budget and speculation about potential changes to negative gearing and the capital gains tax (CGT) discount were also likely to have dampened demand.
According to Cotality, the decline in clearance rates indicated softer conditions than recent weeks, with conditions failing to rebound from “seasonal and market-related impacts”.
In addition to the clearance rates, volumes also softened, with 2,212 auctions held last week – a 13.6 per cent drop below the previous week.
The decline in auctions was also likely due to buyers being uncomfortable with the process, with recent data showing that only 1 in 10 Australians would be willing to buy under the hammer.
Melbourne’s preliminary clearance rate of 57.7 per cent was the city’s lowest reading since the last week of September 2024.
However, the River City led auction volumes, with 1,078 having gone under the hammer, a 15.6 per cent reduction from the previous week but 34.9 per cent higher than the same time last year.
Sydney saw the preliminary clearance rate fall to 55.2 per cent, the lowest in four weeks, reversing the upward trend seen since mid-April.
Across the city, 739 auctions were held, a 10.5 per cent fall on the week prior, but 12.7 per cent more than the same week last year.
In Brisbane, the preliminary clearance rate has held below 60 per cent in six of the past seven weeks, rising only one per cent last week to 53.7 per cent.
The city hosted 164 auctions, marking a 20.4 per cent fall on the previous week, but 53.3 per cent higher than a year ago.
In Adelaide, the early clearance rate was higher than other capital cities, at 67.2 per cent - 3.2 percentage points higher than the week prior.
Across the city, 106 properties went to auction, down 27.4 per cent from the previous week and 2.8 per cent from a year ago.
Out of Canberra’s 114 auctions, just 48.3 per cent returned a positive result so far, while just 11 auctions were held in Perth and none in Tasmania.
Cotality has forecast auction volumes to ease further this weekend, with just over 2,000 currently in the calendar, rising to around 2,350 next week.
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